Many financial institutions are providing plastic stored-value cards (e.g. debit cards, telephone calling cards, loyalty cards, etc.) that can be used in lieu of cash. To enable a stored value card to supply spending capacity, a user transfers an amount of value to the issuing institution, which stores or credits a corresponding amount of value to the user's account, allowing the value to be spent by the card user, thereby providing spending capacity to the card user. The value may be transferred to the issuing institution in a variety of ways such as on-line transfers from bank accounts or credit cards. The stored value cards then can be used to pay for items in stores or on-line, and to withdraw cash at automated teller machines (ATMs). The stored value cards appear to function like credit cards, but they often extend little or no credit to the user, so the cards do not substantially enable users to finance their transactions.
Some people or entities may be unable, or may not desire, to acquire traditional credit cards (e.g., teenagers, college students, employees, financially insecure or dependent consumers, or others lacking sufficient credit history, permanent income, or age). These parties, however, often desire the alternative of stored value cards for the convenience and prestige they provide. Those who are responsible for such consumers (e.g., parents, guardians, employers, and the like) often desire stored value cards because they provide a convenient mechanism for disbursing financial support to their employees and/or dependents. For example, stored value cards often enable parents to add value to the cards on-line, remote from a dependant who may be away at college, traveling abroad, or residing with a different guardian. Similarly, companies may desire to use stored value cards to enable employees to make expenditures for travel, supplies, or other business related expenses or may even use such financial vehicles for payment of wages, salary, or bonuses. To many parents, stored value cards also provide a useful teaching aid through which dependants may practice skills such as budgeting, saving, disciplined spending and/or management of credit.
In addition to controlling and/or monitoring the spending habits of subsidiaries (i.e., students, dependents, employees), parents often desire to provide security for their children to prepare for contingencies that may arise such as a need for emergency medical care. At the same time, however, those parents may not wish that their children have general access to funds for non-emergencies. Unfortunately, however, many existing credit cards do not provide a convenient mechanism for permitting a user access to a limited set of goods or services or providers of same while limiting their access to other goods or services.
In addition, parents may wish to minimize the impact such subsidiary accounts may cause to the spending power of the parent's account. Yet, traditional mechanisms for establishing spending capacity in a subsidiary have afforded little capability for the parent to limit its liability for the spending of the subsidiary while simultaneously accommodating the subsidiary's spending in an intelligent and flexible manner. For example, for many parents and their subsidiaries, it is simply not practical to determine with certainty what the precise needs of the subsidiary will be at the time that a subsidiary account is established. Moreover, traditional mechanisms for modifying the limits associated with a subsidiary account may be inconvenient for many parents to use. For example, in the event of an unforeseen emergency situation affecting a subsidiary, a parent may need to make spending capacity available to the subsidiary. At the same time, though, the parent may wish to limit when, where, how, and to what extent the subsidiary may use that spending capacity.
Stored value cards may currently be available to provide parents the ability to track and control the spending and/or accumulation of debt by their dependants. For example, some stored value cards provide parents with access to on-line databases that allow review of information about how much and where their dependents spent the value stored on their cards. Dependants also often appreciate the tracking capability because it provides a convenient record not readily available with purely cash transactions.
Some cards are available that enable parents to prevent the cards from being used by the dependent to purchase goods and/or services from specific merchants or classes of merchants (e.g., those who sell pornography, tobacco and alcohol, or other forbidden goods or services). For example, American Express'Cobalt card enables the blocking of purchases from on-line retailers that sell pornography, tobacco and alcohol. Similarly, U.S. Pat. No. 6,173,269 discloses a method and apparatus for executing electronic commercial transactions with minors where such transactions are limited only to those vendors that have been approved by the minor's parents. Moreover, M2Card highlights “questionable” transactions on account summaries. Other stored value cards, such as “Visa Buxx,” provide convenience features such as the ability to accept and accumulate gifts in the form of value to be spent at particular merchants. For purchases above the amount of the gift, additional value may be deducted from the stored value card. Other examples of currently available stored value cards include MasterCard Electronic Card (India, Malaysia), MasterCard Generation X (Brazil), Visa (Brazil), Novacash (Argentina), and AAA Everyday Funds. Unfortunately, stored value cards often require payment of funds prior to or contemporaneously with addition of value to the cards. Thus, once the funds have been credited to the dependant's account, the cards provide parents with only limited control over the spending capacity and debt accumulation by the dependant.
Other attempts to satisfy the above-described needs without requiring prepayment and storage of value on the cards of the dependants involve the issuance of subsidiary cards that are linked to, and are able to access, the credit lines of the master accounts. For example, U.S. Pat. No. 4,837,422 describes a multi-user card system in which a card combination that is issued to a single cardholder can be re-programmed by the cardholder for use by a sub-user to a desired extent with regard to value and time. Similarly, U.S. Pat. No. 5,864,830 discloses a data processing method of configuring and monitoring a satellite spending card linked to a host credit card such that a predetermined available spending capacity of each satellite card is selectively determined by the holder of the parent card. Moreover, U.S. Pat. No. 5,294,472 describes a credit card spending authorization control system in which allowing a parent to control the use of an ancillary credit or debit card, which is issued to a subsidiary. Further, U.S. Pat. No. 5,953,710 shows a subsidiary's credit or debit card system that includes a subsidiary's credit card account linked to a parent's credit or debit card account. The systems disclosed in the foregoing patents have typically experienced limited success because parents may not wish to provide their dependents with access to the parents' credit line. Moreover, a sufficient mechanism does not exist that would enable a parent to provide credit to a subsidiary, such as a child, while retaining the ability to control the spending capacity and debt accumulation by the subsidiary.
While it may be advantageous to control and/or monitor the spending capacity of a subsidiary party, it has also been recognized that accepting responsibility for the spending of a subsidiary can entail various disadvantages. For example, where a subsidiary is traveling abroad (e.g., the subsidiary would like to consume spending capacity in a country other than that where the parent resides or other than where the parent card's institution is located), fluctuations in currency exchange rates may cause conventionally defined spending capacities to be inadequate to satisfy the needs of the subsidiary. This may occur, for example, where the spending capacity is defined in terms of U.S. dollars, where the value of a U.S. dollar falls with respect to a Japanese yen, and where the subsidiary resides in Japan. On the other hand, a parent may similarly wish to avoid situations where a subsidiary enjoys a windfall as a result of an advantageous shift in currency exchange rates. To avoid such difficulties, the user may often monitor the exchange rates to compensate for fluctuations. Depending on whether the parent undertakes to perform such monitoring, either the parent or a subsidiary usually assumes the risks associated changes in currency exchange rates.
It also may be desirable to modify the spending capacity associated with a subsidiary card to accommodate changing conditions associated with specific events, economic conditions, or simply the passage of time. For example, it may be desirable to periodically modify spending capacity to accommodate the occurrence of periodic expenses such as tuition or rent, while still restricting a subsidiary from depleting spending capacity before it is needed (e.g., during summer vacation, before tuition becomes due). It may also be desirable to adjust spending capacity or other spending restrictions based on, for example, the age of the subsidiary or the subsidiary's passage of the age of majority or another predefined milestone. Similarly, it may be desirable to adjust spending capacity with the conclusion of a school term and the beginning of summer break or to accommodate a planned trip such as a summer trip to Europe. In the employment context, it may be desirable to adjust spending capacity in situations where, for example, the subsidiary passes an anniversary date or otherwise becomes entitled to a salary adjustment or a bonus, where a corporate administrator has adjusted allowable per diem expenses or wishes to implement a planned adjustment to account for inflation, or the like. It may also be desirable to be able to effect such changes automatically, without requiring intervention each time conditions change.
In recent years, economic globalization has led to an increased number of international business travelers. Yet, as mentioned above, financing international travel in today's environment may give rise to certain difficulties. Business and pleasure travelers often remain in a country of a different origin and/or monetary base than from where the business traveler originated. In some cases, the business traveler may desire to remain in the foreign country for an extended period of time in order to complete his intended business. At any given time, a corporate organization may be managing the funding and other financial arrangements for a large number of employees traveling abroad. The financial needs of those employees may not always be easy to accurately anticipate and/or administer.
The difficult financial needs include, for example, subsisting in a foreign country for any extended period of time typically involves a business traveler paying for living or business expenses as they arise. In that regard, an employer may provide the business traveler with different systems and methods for paying for the expenses. For example, the business traveler may be given cash which can be issued in the currency of the traveler's country of origin (e.g. local currency) or in the currency of the country of the traveler's intended destination (e.g. foreign currency). However, carrying cash has several disadvantages. For example, the cash typically is converted to the currency of the country of intended travel using international currency conversion rates. Further, the traveler typically keeps track of expenses incurred during his business trip for reimbursement and accounting purposes. Further still, cash is often irreplaceable if lost or stolen, leaving the business traveler without sufficient funds to sustain his trip.
In spite of the disadvantages of carrying cash, some business travelers may still prefer to carry a negotiable paper currency such as traveler's checks. In general, paper traveler's checks are issued in the currency of the country in which the traveler's checks are intended to be used. In addition, the traveler's checks typically are given a unique serial number for tracking the checks in the event the checks are lost or stolen. Further, the traveler's checks often are countersigned by the holder before it may be negotiated. Traveler's checks may be desirable as compared to conventional cash because of the signature authorization required and because of the ability to be re-compensated the face value of the traveler's checks if the checks are lost or stolen. The traveler may recoup her losses by reporting to the traveler's check issuing institution the serial numbers of the lost or stolen checks. Unfortunately, since the traveler's check issuing institution must verify that the checks were not used, or were subject to unauthorized use, such reimbursement is typically not immediate. Thus, the traveler is often placed at a financial disadvantage until such time as the verification is completed and the traveler is reimbursed the amount of the lost checks.
Another method for providing the business traveler with needed funds includes issuing the traveler a transaction card enabling the business traveler to electronically interface with a financial institution. For this purpose, a variety of cards exist. For example, a traditional credit card is a card which typically contains a magnetic stripe encoded with an account number which may be read at special terminals at a merchant's location. The merchant terminal may read the account information and may transmit the account information and the amount of the intended transaction to the credit card issuing institution. The credit card issuing institution may check credit available for the account against the requested transaction to determine if the requested transaction is within the transaction account credit limit (e.g., available credit). Where the requested transaction does not exceed the available credit, the issuing institution may extend the credit needed to complete the desired transaction. Although the credit cards may be readily replaced if lost or stolen, using the credit card to complete a transaction has clear drawbacks. In particular, the user of the credit card is often charged interest on the credit extended, which means that the traveler may end up paying more than the original amount needed to complete the desired transaction.
Another type of transaction card which may be used by a business traveler is a debit card. Typically, a debit card is not used to extend credit, but rather to debit or withdraw cash from an account for immediate payment to a merchant. The debit card typically corresponds to a checking account (or savings account) established by the holder of the debit card. The checking account is usually established at a financial institution located in the country of intended use. The checking account and the financial institution are usually only recognized in the country in which the financial institution is located. Thus, the debit card is typically not useful for completing transactions in countries other than where the checking account is located. This is especially important since the financial institution to which the checking account is linked may not be recognized in the country where the transaction is to be completed.
Still another type of transaction card which may be used by a business traveler to access funds is the automated teller machine (ATM) card. Similar to a debit card, the ATM card is typically linked to a checking (or savings) account maintained at a particular financial institution. As used herein in the context of financial accounts, the terms “maintain” and “maintaining” refer to any act or combination of acts of or relating to establishing, authorizing, enabling, coordinating, funding, debiting, crediting, accessing, tracking, accounting, reporting, modifying, or otherwise facilitating and/or administering one or more such financial accounts and/or transactions involving such accounts. The ATM card may allow the ATM cardholder to remotely access funds stored in the checking or savings account by presenting the card to an ATM which is connected to an ATM interchange to which the financial institution subscribes. Like a debit card, the financial institution should be recognized by the ATM network. Thus, ATM cards may be less useful to a foreign business traveler who attempts to retrieve funds in a country other than where the checking or savings account is established. The financial institution is often not recognized in the country where the transaction is to be completed.
Still another method for providing the business traveler with funds includes providing the business traveler with a “prepaid” transaction card which is linked to a prepaid account. The prepaid account may be established at a financial institution located in the country in which the card is to be used. The prepaid method includes the prepaid cardholder depositing into the prepaid account a predetermined amount of funds. Subsequent to delivery of the goods or services, the amount of the transaction for goods and services is charged against the amount available in the prepaid account. However, similar to the debit cards, the prepaid card is typically geographically limited in that the card may not be used in a country which does not recognize the financial institution where the prepaid account is established. Consequently, since it is often imperative that the business traveler be provided access to sufficient funds for payment of these expenses, a system and method is needed which will allow the business traveler to access the needed funds, whether or not the traveler's attempt to access the funds in his country of origin or the foreign country in which he is traveling.
Accordingly, it would be advantageous to have a system and method for providing a flexible limit subsidiary card that does not require the prepayment and/or storage of value prior to use to facilitate transactions. It would also be advantageous to have a financial vehicle that would enable a parent (e.g., employer) to provide value to be spent by a subsidiary (e.g., employee), while providing control over the spending capacity and/or debt accumulation by the subsidiary, and it would be advantageous if the parent would be able to do so remotely from the subsidiary, and even if the parent's financial institution is located remotely from that of the subsidiary. It would further be advantageous if such control included the ability to limit total spending or to prevent or limit spending for specific classes of goods and/or services or to limit or prevent spending at specific classes of merchants or service providers or to limit or prevent spending at specifically identified merchants or service providers. It would also be advantageous to have a system and method for providing a flexible limit subsidiary card that would provide additional features such as replacement in the event the card is lost or stolen, wherein such a feature is are not typically available with cash. It would also be advantageous to have a system and method for providing a flexible limit subsidiary card that would provide the user with freedom and independence to use the received funds to facilitate on-line and off-line transactions as well as withdrawals of money from ATMs. It would also be advantageous to have a system and method whereby a parent could provide security for emergency situations such as medical care while limiting access to credit in other situations. Finally, it would be advantageous for such a card to enable carry-over of a credit balance.